A firms production capacity is 1.5 million units, with annual fixed costs of $3.2 billion for depreciation, plant maintenance, corporate marketing, and general overhead. Additional values for the three vehicles produced and sold by the firm are shown in the table below: VEHICLE X VEHICLE Y VEHICLE Z MSRP $15,999 $20,999 $25,999 Dealer Discount 10% 12% 15% Variable Cost $11,799 $13,599 $16,899 Adv. & Promo. $35 million $50 million $70 million Prev. Unit Sales 400 thousand 600 thousand 300 thousand

How will you allocate the fixed costs across the products?

Calculate the break-even units for each product, showing the intermediate calculations for the allocated fixed costs and selling price (dealer invoice).

What impact does a 10% drop in MSRP have on the break-even point for each vehicle?

Using the original MSRP, recalculate break-even if advertising and promotion expense for each product is doubled.

What impact might the introduction of a new product in your vehicle line have on fixed costs and the break-even calculation?